LGBTQ-FRIENDLY FIRMS AND CLIMATE RISKS: EVIDENCE FROM FIRM-LEVEL ANALYSIS

Abstract

Using a comprehensive panel dataset of U.S.-listed firms from 2001 to 2021, this study finds a strong negative association between LGBTQ-inclusive policies and firm-level climate risk. Our findings remain robust across multiple model specifications; especially, the mitigating effect of inclusive policies is more pronounced among firms with lower levels of ESG-linked executive compensation. These results suggest that social inclusion practices enhance transparency, organizational adaptability, and environmental resilience. The study underscores the role of diversity- and inclusionoriented corporate governance practices in mitigating long-term environmental challenges.